Andorra, officially known as the Principality of Andorra, is a sovereign landlocked microstate in South western Europe, located in the eastern Pyrenees Mountains and bordered by Spain and France. It is the sixth smallest nation in Europe, having an area of 468 km2 and an estimated population of 85,000 in 2012. Its capital, Andorra la Vella, is the highest capital city in Europe, at an elevation of 1,023 metres above sea level. The official language is Catalan, although Spanish, Portuguese, and French are also commonly spoken.
Created under a charter in A.D. 988, the present Principality was formed in A.D. 1278. It is known as a principality as it is a monarchy headed by two Co-Princes – the Spanish/Roman Catholic Bishop of Urgell and the President of France.
Andorra is not a member of the European Union, but the euro is the de facto currency. It has been a member of the United Nations since 1993.
Corporate Tax Rate
The advantages of forming a Andorran company make it one of the most attractive jurisdictions in Europe:
- 10% maximum corporate tax on profits
- 2% corporate tax on profits for companies involved in activities such as: – international trade – international management of intangibles – international investment and financing. These 2% reduced corporate tax models are subject to some minimum requirements.
- Tax-exempted status for certain holding companies
- Andorra has Europe’s lowest value added tax (VAT / sales tax) at 4.5%
- Social security contributions for companies are around 14%
There are two main types of limited liability companies:
1. Societat Limitada (S.L.) This type of company is the norm for small family business enterprises with a limited number of shareholders and have a minimum capital requirement of 3.000€.
2. Societat Anònima (S.A.) This type of company is normally a requirement for multiple or mass shareholder situations and have a minimum capital requirement of 60.000€.